The impact of inflation on financial sector performance

• 成果类型: Article
• 署名作者: Boyd, JH; Levine, R; Smith, BD
• 署名单位: University of Minnesota System; University of Minnesota Twin Cities; University of Texas System; University of Texas Austin
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/S0304-3932(01)00049-6
• 发表日期: 2001
• 页码: 221-248
• 关键词: banks; financial markets; inflation

摘要

A growing theoretical literature describes mechanisms whereby even predictable increases in the rate of inflation interfere with the ability of the financial sector to allocate resources effectively. This paper empirically assesses these predictions. The evidence indicates that there is a significant, and economically important, negative relationship between inflation and both banking sector development and equity market activity. Further, the relationship is nonlinear. As inflation rises, the marginal impact of inflation on banking lending activity and stock market development diminishes rapidly. Moreover, we find evidence of thresholds. For economies with inflation rates exceeding 15 percent, there is a discrete drop in financial sector performance, Finally, while the data indicate that more inflation is not matched by greater nominal equity returns in low-inflation countries, nominal stock returns move essentially one-for-one with marginal increases in inflation in high-inflation economies. (C) 2001 Elsevier Science B.V. All rights reserved.